4 Factors Are Changing The Face Of The US Mortgage Market

The U.S. mortgage market has had a rough go of it in the first
quarter of this year, with mortgage volumes in Q1 down 60% on the
year.

This came on the back of the severe winter, higher mortgage
rates, and regulatory uncertainty.

But the mortgage market is changing.

Since the middle of 2013, the U.S. mortgage market has slowly
been "undergoing a major reset from a refinance- to a
purchase-driven market cycle," writes Anand K Nallathambi,
president of CoreLogic.

Nallathambi points out four things that will "change the face of
the mortgage market:"

"Shifting Demographics:" Typically at this
point in housing recoveries, first-time homebuyers tend to be
in the market, but that isn't the case with Millennials (21-34
year olds). "Although the higher level of education
achieved by many millennials portends future earning potential,
they are still facing difficult job prospects in the
near-to-medium term," writes Nallathambi. "As a result, they
have remained renters longer than expected. At the same time,
as investors leave the market, baby boomers are retiring in
record numbers. This is a trend that will continue to shape the
housing market for the next two decades."

"Underlying health of the U.S. homebuyer:"
This recovery was driven not by strong income growth and
fundamentals but by accommodative monetary policy. "Until we
see a sustained pathway to job creation and income growth, we
will continue to see potential homebuyers hesitate to take on
mortgages and purchase homes," writes Nallathambi.

"Unintended consequences of low interest
rates:" " Low interest rates could exacerbate supply
side issues in the housing market. Consumers locked in low
interest rates when refinancing their mortgages. And while this
helped consumers it raised the "the possibility that these
homeowners, at least for the medium term, will be staying out
of the housing market, thereby prolonging the current inventory
shortage and reducing the pool of possible buyers," writes
Nallathambi.

"The End of the Investors “Gold Rush:'" You
can still find investors in parts of the U.S. but the bargains
they're looking for or the types of properties they are in the
market for, are declining. "Our research shows that investors are
leaving the market and first-time and trade-up buyers will need
to step in to fill the void," Nallathambi writes.